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ADOT HURF Exchange Program

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HURF Exchange Program History

• Created by Legislature in 1997:

o Program is at ADOT’s discretion

o Targeted to rural cities, towns, and counties

o Authorizes ADOT to provide State Highway Funds (SHF) in

exchange for federal aid; only legal use of SHF on local projects

o Minimum exchange rate of 90¢/$1

o Projects must be on federal aid system (no local roads)

• Primarily used for construction phase

• Program active 1998-2009 (last project completed in 2014)

• Extremely popular with project sponsors and ADOT - facilitated 145

projects exceeding $91 million

• Suspended in 2009 because SHF revenues declined so precipitously

and ADOT could no longer afford the program

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Historical Utilization by COG/MPO

COG/MPO Total HURF Exchange

$ Paid Out

# of

Projects

Average Project

Size ($)

CAG 11,493,081.45 38 302,449.51

CYMPO 1,316,373.00 2 658,186.50

FMPO 2,006,459.28 5 401,291.86

MAG 320,394.43 1 320,394.43

NACOG 18,953,257.13 40 473,831.43

PAG 26,419,484.18 13 2,032,268.01

SEAGO 9,982,072.90 5 1,996,414.58

WACOG 13,102,205.06 31 422,651.78

YMPO 7,561,414.52 10 756,141.45

Total $ 91,154,741.95 145 $ 628,653.39

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Issues Under Previous Program

• Informal approach to program management:

o No formal agency policy or procedures

o Limited historical/institutional knowledge following 8-yr suspension

o Lack of clarity regarding types of fed aid, eligible recipients, etc.

• Limited visibility and understanding regarding SHF impacts and risks

• Inactive projects despite less onerous requirements:

o Lack of emphasis regarding project delivery expectation and

accountability

o No finance feedback mechanism to project sponsors and

COGs/MPOs

o Problems obtaining close out information and closing projects

timely

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HURF Exchange Program 2.0

• New ADOT policy FIN 5.01 - establishes a clear expectation of timely

project delivery

• Effective 10/1/17 (Federal Fiscal Year 18)

• Limited to discretionary federal aid only (Under 200K and Under 5K

STBGP population only)

• Swap rate remains 90¢/$1

• COG/MPO project ledgers will reflect all HURF Exchange transactions

• Current policies and procedures used for federal aid projects will also

apply to HURF Exchange:

o Loan/transfer executed by March 31st

o Authorization requests submitted by May 15th

o Use or lose by June 30th

o Inactive project management

• ADOT can suspend the program if SHF revenues decline due to

appropriations, transfers or special distributions

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HURF Exchange Program 2.0, cont.

• Amount available for the next five years will be determined annually in

conjunction with the development of the ADOT 5-year program

• All work phases eligible; some federal requirements still apply in

construction if federal aid used in design (NEPA, Buy America)

• Currently underway projects phases not eligible

• Final voucher to be conducted on all projects

• Projects subject to audit

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HURF Exchange Program 2.0, cont.

• Suspension process is included in policy

• Repayment required if project not built within 2 years of completion of

HURF exchange-funded design

• ADOT may choose not to engage in a HURF Exchange in cases of

misuse of, or failure to repay, HURF Exchange funding

• Project which cannot make progress may be deobligated after

consultation with local agency and appropriate COG/MPO

• De-obligated or released funds returned to COG/MPO for reprogramming

• HURF Exchange follows ADOT Inactive Policy, projects are tracked for

progress. ADOT works with PM to identify projects going inactive and work

with local agency to get project on track

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HURF Exchange Eligible Projects and Costs

• Eligible projects:

o Primary purpose is improvement of efficiency and safety of motor

vehicle travel on roadways;

o On the federal aid system (no local roads) and eligible for STBGP

funding in Under 200K and Under 5K population categories;

o All phase(s) programmed in approved, fiscally-constrained TIP; and

o All phase(s) approved by the COG/MPO Technical Advisory Committee.

• Ineligible costs:

o Maintenance

o Scoping

o Incurred prior to date of finance authorization

o Items outside project right of way

o Utility work not directly and unavoidably related to the project

o Betterments for utilities.

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HURF Exchange Eligible Entities

• Population figures used for HURF Exchange are:

o 2010 Federal Census – used for determination of STBGP < 5,000 and

STBGP 5,000 to 200,000 funding – allocated based on regional

planning area

o Arizona Office of Economic Opportunity – per Executive Order 2011-04,

the population estimates provided by AOEO have to be used in

determining usage of State Highway Funds

• Example of Population Calculations:

o Unincorporated population of Pinal County based on 2017 AOEO

numbers: 219,026

o This population is then allocated to each planning region in Pinal County

(CAG, MAG, SCMPO) based on the percentage of the unincorporated

population in each planning region in 2010

o For example, SCMPO was 16.95% of the total, applied to the 219,026

comes up with 37,125 for unincorporated Pinal County in SCMPO,

therefore they would be an eligible HURF Exchange entity

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HURF Exchange Eligible Entities, cont.

• Eligible Entities:

o All cities and towns not located within the federally defined

Phoenix/Mesa and Tucson Urbanized Areas and unincorporated

portions of counties within a regional planning area with 200,000 or

fewer residents

• Ineligible Entities:

o Cities and towns located within the Phoenix/Mesa or Tucson Urbanized

Areas – these entities are factored in the STBGP funding for areas of

greater than 200,000 population (Urban STBGP) and that funding is not

part of the HURF Exchange

o Tribal entities are not eligible as direct recipients of HURF Exchange

funding, but may work with eligible project sponsors

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HURF Exchange Eligible Entities, cont.

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HURF Exchange Program Benefits

• Less restrictive design and construction standards

• Fewer requirements

• Less project oversight

• Lower project costs

• Self-administered as opposed to ADOT-administered

• Constructed and open to traffic more quickly than federal aid projects

• Fewer projects for ADOT to administer

• 90% of funds received up-front (by phase) instead of reimbursed*

• Less than half of states have swap programs

*Final 10% is a reimbursement

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HURF Exchange Program Risks

• Subject to several risks associated with the State Highway Fund:

o Fund sweeps, appropriation, transfer and distributions

o HURF revenue performance

o Timely and continuous receipt of federal aid reimbursements

o Significant changes in federal aid or pro rata match requirements

o Economic/market conditions

• Loss of federal aid project delivery knowledge and experience in local

agencies

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HURF Exchange Program Rollout

• Policy, Intergovernmental Agreement (IGA) and related documents)

developed and reviewed by internal stakeholders (Project Management

Group, various technical sections, Local Public Agency section, FMS,

Communications, Government Relations and Attorney General’s office)

• ADOT has held numerous presentations of the planned HURF Exchange

program:

• Jan 2017 – Brief overview to senior ADOT staff

• Mar 2017 – COG/MPO Planner Meeting, EDC Stakeholder Meeting

(attended by some large cities)

• Apr 2017 – Road and Streets, Yuma MPO TAC meeting

• Jun 2017 – MAG Streets Committee

• Aug 2017 – ADOT District Presentation, North AZ COG TAC meeting

• Nov 2017 – Director/Governor’s Office

• ADOT has planned presentations/webinars for the rollout of the HURF

Exchange program:

• Dec 2017/Jan 2018 – League of Cities and Towns, Rural

Transportation Advisory Council, County Supervisor Association

• Jan 2018 – Webinar for ADOT staff, COGs/MPOs and local agencies

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HURF Exchange Program Resources

• ADOT HURF Exchange Policy – FIN 5.01

• ADOT HURF Exchange web page – HURF Exchange Website

• ADOT HURF Exchange overview - HURF Exchange Overview

• HURF Exchange IGA template – HURF Exchange IGA Template

• HURF Exchange FAQ - HURF Exchange FAQ

• ADOT Federal Aid Highway Program web page: Federal Aid Highway

Program homepage

• COG/MPO Federal Formula Funding Ledgers – posted on the ADOT

Federal Aid Highway Program web page

• Functional Classification Maps: Functional Classification Maps

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Questions???